Adam Back

Adam Back



early this year i was curious of the claim "bitcoin 2x's per year on average". it checks: the decade jan 2013 - dec 2022 #bitcoin went up 2.036x/year (1200x in a decade). if that continues we'll cross $10mil/BTC and $200 tril market cap by end of next 2 halvenings, about 9 years.

$200 trillion is a @halfin 2009 #bitcoin market cap prediction number. it's a LOT, displaces a significant part of the store of value premiums in bonds, real estate monetary premium, gold, 60:40 stock portfolios, etc. some think adoption will slow, derivatives reduce volatility.

i'm not sure about the adoption slowing, nor the volatility reducing; there are other factors. the new cycle people who learn to hodl/stack, who over time make it their mission to buy and cold store a much #bitcoin as possible, even resorting to leverage (volatility creator).

adoption could have hyperbitcoinization spurts, where rapid viral adoption nukes a weak currency in a hyper-inflationary frenzy, and domino crash 20 bottom-tier currencies. people get pragmatic, adapt fast if they see fiat melting, a rush of others protecting savings via #bitcoin

also bear in mind bitcoin does not have to absorb anywhere near $100 tril to reach that market cap, due to relative thin trading, and hodl/cold store investors. if bitcoin really gets moving, it will become harder to get anyone to sell, have to pry it out of their cold wallets

given volatility, i think #bitcoin can overshoot wildly and tap one of these $100-300 trillion market caps, correct and then regain a steadier adoption over time. i suspect people with average entry points, relative to then current price won't have much incentive to sell in size.

it's true there is some in-effect BTC rehypothecation via side-contracts like perpetual futures, however reality is there is not really much naked short interest, so most of the "shorts" are delta-neutral, collecting funding rate on USD, and buy matching physical BTC collateral.

the market in bitcoin-native financialisation is immature, almost untouched. bitcoin structured products, mortgages backed by real-estate but interest guaranteed by BTC, other products make bitcoin easier to use for more people, and match risk profiles. which creates more growth.

so i think things will get "interesting" over the next two halvings. and fast, we don't have much time to scale tech. we need somewhere for the next billion users to own their own UTXO, their own keys, with censorship-resistant cold storage. without weakening main-chain security.

that probably means sidechains/drivechains as a tradeoff. more lightning optimization. other layer2s like @liquid_btc (trading), fedimint @fedimint (community federated chaum mints) and others. we don't have much time as tech takes time to mature, wallets, interop, integration.

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